A Budget for Jobs & Growth is welcome but where do you find the finance to grow?

The Budget this week re-emphasised the critical importance of our Small-Medium Businesses (SMBs) in generating growth. We strongly believe that the main missing ingredient is a market which enables SMBs to access finance to grow on a reliable and timely basis.

The market for alternative finance in Australia is on track to grow to over $95 billion over the next 5 years and is changing at a rapid pace. Our confidential, flexible working capital product is unique in Australia and we are seeing very strong demand from growing businesses.

This is timely as bank lending to SMBs has decreased for the first time since the GFC (source: RBA): 

  • In Q4 2015, business credit for facilities less than $2 million decreased from $260.7bn to $260.6bn in a quarter which usually demands increased business finance
     
  • In 2015, only 13% of business loans were made to SMBs, compared to around 50% in the 1990s
     
  • Property loans since the GFC have grown by $538.7bn (+54%) while business lending for all sizes of business has increased by just $72.5bn (+9%)

One symptom of the scale of this problem is that the ATO is currently owed over $32bn in overdue tax, mostly from small businesses. The ATO has had no choice but to agree instalment payment plans with over 800,000 businesses in Australia in 2014-15 and this year is no different. In the first six months of 2015-16, more than 420,000 payment plans have been granted.

Without the finance to grow, fiddling with tax rates and allowances makes only a small difference when it comes to getting our economy on a solid long term growth trend.